We at BIP Capital recently issued our second annual The State of Startups SM in the Southeast report, delivering a comprehensive overview of the venture capital and startup ecosystem in this region of the country, including Georgia. The report reviews startup activity throughout nine states in the southeastern United States over the five-and-a-half-year time period from January 1, 2013, through June 30, 2018.
Most notably, we took a closer look in this year’s report at the different types of deals being done in Georgia and other southern states and how they compare to deals in the “Innovation Hubs” of Boston, New York City and the San Francisco Bay Area. We anticipated that we would find significant disparities in the percent of ownership that a dollar buys from region to region and perhaps from state to state. We were wrong.
Instead, our 2018 report revealed that a $1 million investment buys the same ownership percentage of a company regardless of region or state. However, businesses in the Southeast have more revenue at the same valuation, perhaps implying that investors get more value for their dollar in the Southeast —something that’s attracting “outside” investors. While the dominant venture capital investors supporting southeastern companies are based within the region, if you look at the top five most active VC firms in each state (45 in total), nearly one-third are coming from the Innovation Hubs.
Interestingly, this is not the case in Georgia. Unlike the other states studied in the report, the five most active VC firms investing in Georgia companies are all based in the Peach State.
A few other notable observations regarding Georgia that the report revealed:
- Total dollars invested since 2013: $5.0 billion
- Top area of investment (by dollars): SaaS
- Georgia remains the Southeast’s SaaS innovation leader with 358 deals totaling $1.6 billion over the time period reviewed.
- The Biotech/Pharma and FinTech categories are tied for second place here with $606 million and $604 million invested, respectively. However, Biotech/Pharma has closed 123 deals over the studied time period, compared to FinTech’s 62 deals, showing a larger check size and perhaps a greater confidence in the financial tech sector.
We invite you to read The State of StartupsSM in the Southeast report in its entirety here. We hope this report will further educate investors on the emerging trends to watch as well as highlight the region’s growth and future opportunities.
About the Author: Mark Buffington is Co-founder and CEO of BIP Capital, one of the most active and successful venture investors in the Southeast, serving entrepreneurs, investors and operators to grow the emerging company ecosystem. Follow him on Twitter @markbuffbip.